Liability insurance protects you against the nasty consequences of accidents. As you assess your insurance needs, protecting yourself, your family, your home, and your car, you should show healthy respect for Murphy’s Law, expecting that whatever can go wrong will go wrong. And, as it goes wrong, it usually will involve the next-door neighbour’s child.
Liability insurance for your car
The law requires that you carry liability insurance on your car. If you fail to show proof of adequate liability insurance, the government may suspend your driving privileges until you comply with the law. If a law enforcement officer stops you for a routine traffic violation and you fail to provide proof of insurance, you may be taken to jail and your car impounded.
Out there in a big world full of reckless drivers distracted by children and cell-phone conversations, your auto liability insurance is worth every penny you pay-especially your uninsured motorist protection. Setting aside the legal mandate, consider the practical wisdom of liability insurance on your auto: If you caused a little fender-bender, you might absorb the costs of the other motorist’s medical attention and auto repairs. If, however, the unthinkable befell and you caused a serious accident with multiple injuries, how could you begin to afford hundreds of thousands of dollars in medical and rehabilitation costs? This insurance protects not only your body and your body and your car but also all of your worldly assets.
Liability insurance for your home
Your mortgage lender may require that you carry liability insurance as part of your homeowner’s package; but even if it is not required, you should add liability coverage to the insurance on your home.
Keep in mind that your children define “play” as “colliding with toys and each other at very high speeds.” As they become more proficient in their play, they add bicycles, scooters, and skateboards, so that they more easily can achieve spectacular impact with the ground, trees, fence posts, and concrete. When you own children bend, break, and mutilate their bodies in the course of routine play, your medical insurance covers the cost of repairing them. When the obnoxious neighbour’s child sustains an injury on your property, that very same obnoxious neighbour may bring legal action against you for negligence or reckless endangerment. In a civil trial, your more-than-ever obnoxious neighbour may ask not only compensatory damages but also punitive damages. Judges and juries, eager to teach allegedly negligent parents a lesson, may award substantial punitive damages even if it was evil little Johnny Jones’s fault.
Other important liability protections
If you own your own business, your insurance package almost inevitably will include liability insurance, because you want to protect your employees and patrons from accident and injury while they take care of business. As a condition of your insurance, your underwriter may require proof that your business complies with all applicable health and safety codes. If some time has passed since you conducted a safety review of your worksite, you may ask your insurance broker for assistance, assuring that you meet all of the law’s and your policy’s requirements.